Tadawul closes 1.6% higher, breaks past 6,000 points

29/08/2016 05:02 AST

The Saudi stock market recovered on Sunday from last week’s losses. The Tadawul All-Share Index (TASI), which had dropped 4.0 percent last week, rose 1.6 percent to end at 6,071.41 points as many stocks reliant on domestic demand rebounded. “The Kingdom hopes to lure more foreign investors to the exchange with rule changes next month,” commented John Sfakianakis, director of economic research at the Gulf Research Center.

Saudi stocks haven’t been this cheap compared with emerging-market peers in more than five years, he told Arab News.

Companies in TASI, which slumped 14 percent in 2016 as the MSCI Emerging Markets Index gained 14 percent, trade at about 11.7 times future earnings, compared with 12.5 for the developing-nations measure, he added.

Tamer El Zayat, senior economist at the National Commercial Bank, said: “The one-day upswing for Tadawul was driven in my opinion primarily by the infusion of private and public monthly salaries that coincided before trading hours.”

He added: “The near-term outlook is expected to be a range-bound scenario between 6,000 and 6,500, especially that oil markets are yet to balance, the budget deficit for this fiscal year will remain in double-digits and corporate profitability is under pressure.”

Reuters reported that Sunday’s trading volume remained thin — among its lowest levels this year — which suggested many investors remained wary of the market and that it might not be starting an extended rally.

Builder Abdullah Abdul Mohsin Al-Khodari and Sons climbed 8.6 percent after it renewed an SR132 million ($35.2 million) Islamic credit facility, allowing it to obtain working capital for projects, and won an SR69 million contract from the water ministry.

Saudi Electricity added 5.3 percent and Bank AlJazira rose 3.1 percent. The value of traded shares reached SR2.50 billion with volume of 153 million of shares on Sunday.

Arab News